Health Care Reforms – Only Requires Health Insurance Reforms

Health care reform is the topic of discussion and media is giving lot of air time to this issue. Many of us have seen spirited town halls meetings, heated debates on television channel, and business channels focusing on economic aspects. Medical professionals has its own views on how to reduce cost, pharmaceutical companies have their own agendas, insurance companies are not bogging down, rich don’t want to pay for poor and illegal immigrants, companies are looking for ways to reduce their cost, and finally, our government wants to pay but has no clue where will it pay from (printing dollars?).

All this makes me tend to believe nothing is going to come out of this debate. There are few things that really bug me (1) There is notion that similar to Walmart-ization of medicines to four dollars, if there is Health-mart, it will reduce cost; (2) There is a lot of focus on debates between business community and politicians, while healthcare professional including doctors are being left behind in this debate; and (3) This concept of medical tourism – where you can go to some other country like Mexico or India and get cheap medical procedures.

First, the notion of Walmart-ization of health care (a.k.a. Health-Mart) will resolve the problem of high cost. Folks purporting this concept fail to understand that the concept of Walmart works for run off the mill types of products which does not have high reliability associated with it. It is simply cost arbitrage based on sourcing or based on currency difference. Even Walmart sells medicines that are in hundreds of dollars (and not four dollars as being marketed). There is no concept of development, quality, and reliability. Would you buy a cold medication or pain medication manufactured in China or Bangladesh? Would you be comfortable sending your sick parent or kid into MRI or CAT Scanner manufactured in any emerging country? In the environment of WalMart, there will never be a new drug formulation or invention. There can be many more similar examples. Just because a particular concept works in one domain, it does not mean one can just transplant a same approach everywhere. (NOTE – I am not attempting to deride any emerging country. I am just being pragmatic)

Second, health care professional including doctors are being pushed behind in this debate. Medical community is saying, don’t let insurers’ dictate us what we should do, instead do something to change the culture of lawsuit claims. You go to the doctor for cold and fever, and you get handed the slue of medical test. In many cases, it is not required, but doctors are forced to do it to cover their bases from possible future claims. Healthcare professionals saying cost can be reduced by 30% by proper electronic administration. Here also there is a debate about privacy issues. Are we going to listen to them? Probably not, because its business interest driven.

Third, if countries like Mexico or India can provide cheap surgery, why can’t we in US replicate that model? I find this argument completely out of whack. It’s cheap because of the currency difference. It is not cheap on purchase power parity. The kind of medical attention US patient gets is in many cases elitist in those countries. It’s the power of dollar that makes it appear cheap.

Unfortunately, its human nature to think grass is always greener on other side. We never appreciate what we have, instead we envy others. I believe, in relative terms, US health care sector provide a best in class, high quality health care. It’s all about cost associated with it.

Like in any other sector, all it requires is control in greed of insurance companies. We need to control the business practices of insurance companies. In my opinion, insurance companies for their business interest have screwed the whole health care sector.

What are your thoughts?

5 Responses to “Health Care Reforms – Only Requires Health Insurance Reforms”

  1. Nicely written, so have you any other information on that, if yes, then please send it to me, I am hungry to read your next post.

  2. Phillip says:

    Control the greed of insurance companies?

    Greed is not a bad thing. Capitalism requires incentives to function. Once you reduce the benefits of performing a service or operating a business, there is less of an incentive to produce. If you want to undermine the foundation of our economy, allow the government to limit prices. It *worked* great during the Iranian oil crisis in ’79. Now imagine that at the doctor; no thank you.

  3. Ethan says:

    Companies only have the luxury of indulging greed in markets that exhibit certain attributes. Those attributes are: monopoly, subsidy, and regulation.

    There are very few natural monopolies; most are government-granted. All intellectual property rights are a government-granted monopoly, as are all electromagnetic spectrum rights and many utility infrastructures.

    Subsidies are another government specialty. The loan industry is subsidized when they are allowed to borrow from the government at below-market interest rates – subsidized by all users of pre-existing dollars. And any borrower is subsidized when the government agrees to guarantee their loan. Without those subsidies our natural greed would not have been able to indulge itself to the extent that created a recession – we simply wouldn’t have been able to afford it. The costs of our lending and borrowing would have been tied to actual production or economic expansion, and would have faced mounting headwinds whenever it ran ahead of those things. Many utilities infrastructures were subsidized as well, at the time of their construction if not in their ongoing operation.

    Heavily regulated industries are nearly always hotbeds for greed and waste. Banking, healthcare, insurance, communications, education and utilities. The regulations stifle innovation and competition, and are often literally written by the major players. If not written by them in the first place, they are lobbied into weapons that are used to aggrandize existing players and keep new players from bothering to compete.

    Healthcare suffers from all three. Governmental interference has divorced consumers from product selection, and even from costs. Tax breaks for businesses buying insurance make no sense; consumers shouldn’t be at a tax disadvantage to *anyone* when purchasing insurance for themselves. The present tax law represents a subsidy that distorts normal market effects. By refusing to enforce contracts, the government has made it impossible for me to reasonably limit the liability of my care providers, driving up costs without regard to what I want to pay. I can’t even save money by forgoing privacy features, despite the fact that I don’t give a rip if everyone on the planet knows my medical history. No, every entity I deal with must be HIPAA-compliant, at massive cost, because that is a feature that some other people care about, some of the time. Nor does anyone offer a whole-life healthcare insurance product, because every year the government changes the rules on what they have to cover and how they have to run their companies. No one can predict their costs far enough into the future to write a long-term policy. Nor can I opt for cut-rate medical service. I can’t just get my teeth cleaned by a hygienist who has been doing it for 30 years. No, they have to be under the nominal direction of a state-certified dentist, driving the cost of a simple cleaning up by about 4x.

    In short, consumers no longer purchase insurance directly, nor are they allowed to manage their own risks, or select their own providers (from the *entire* population), or individually judge the desirability of expensive features. So why should we expect them to have any power? And if they have no power, how do we expect them to get what they want? Because politicians are going to a) know what in the world that is, and b) actually succeed at forcing someone to provide it to them, at a reasonable cost? Please. That requires more faith than anyone should have in their entire body.

  4. ravin.renie says:

    interesting perspective, but aren’t medical professional (doctors) getting paid huge sum? have we said admin cost are 30 to 40%? probably that’s not insurance driven!

  5. very true, like wall street, now the health insurers are getting drunk. someday its going to burst, but unfortunately, its directly affect people’s health…….

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